Correlation Between Salesforce and Fastly
Can any of the company-specific risk be diversified away by investing in both Salesforce and Fastly at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Salesforce and Fastly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Fastly Inc, you can compare the effects of market volatilities on Salesforce and Fastly and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Salesforce with a short position of Fastly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Fastly.
Diversification Opportunities for Salesforce and Fastly
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Fastly is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Fastly Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastly Inc and Salesforce is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Salesforce are associated (or correlated) with Fastly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastly Inc has no effect on the direction of Salesforce i.e., Salesforce and Fastly go up and down completely randomly.
Pair Corralation between Salesforce and Fastly
Assuming the 90 days trading horizon Salesforce is expected to generate 8.47 times less return on investment than Fastly. But when comparing it to its historical volatility, Salesforce is 1.89 times less risky than Fastly. It trades about 0.05 of its potential returns per unit of risk. Fastly Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 769.00 in Fastly Inc on September 24, 2024 and sell it today you would earn a total of 158.00 from holding Fastly Inc or generate 20.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Fastly Inc
Performance |
| Timeline |
| Salesforce |
| Fastly Inc |
Salesforce and Fastly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Fastly
The main advantage of trading using opposite Salesforce and Fastly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Fastly can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fastly will offset losses from the drop in Fastly's long position.| Salesforce vs. SAP SE | Salesforce vs. Uber Technologies | Salesforce vs. Nemetschek AG ON | Salesforce vs. Workiva |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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